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This evening, the international trade committee in the European Parliament approved new rules on the screening of direct foreign investment. Acting on mounting concerns about foreign investors, notably state-owned enterprises, taking over European companies with key technologies for strategic reasons, in February 2017 Socialist and Social Democrat ministers launched an initiative to set up a European mechanism to protect critical European assets against investments that could be detrimental to legitimate interests of the EU or its member states. Ahead of the vote in committee, the Socialists and Democrats in the European Parliament managed to considerably bolster the European Commission’s proposal, especially by substantially enlarging the list of sectors to be screened.

“In recent years we have witnessed a surge of foreign-takeovers into the EU’s high-tech manufacturing, energy infrastructure or ports and railways. We cannot turn a blind eye to strategic take-overs by foreign and especially by state-owned companies that can be detrimental to our interest.

“The European Commission’s proposal for vetting investments was too timid. We must do more to restrict foreign take-overs in key industries and effectively protect our security, competitive edge and jobs. I am glad we managed to beef up the draft law, now many more sectors will be screened, including aerospace, farmland, media and public services.

“Yet, we would have preferred to go even further and stipulate clearer procedures in cases when an investment in one member state threatens the strategic interests of another member state or the Union as a whole. We hope to tighten the vetting procedures even further during the up-coming negotiations.”

Alessia Mosca, S&D spokesperson on trade, added:

“Our knowledge-based economy is Europe’s strength and we are called upon to protect it from state-orchestrated take-overs that could be detrimental to our competitiveness and could cost millions of European jobs.

“The ball is now in the member states’ court. EU governments have to choose between national egoisms and a European Union that truly protects its citizens.

“Not only are jobs at stake here, our unity is too. Through take-overs of key industries, foreign powers may try to divide EU member states. With today’s vote, we are a step closer to effectively protecting Europe and its citizens. We now look forward to start negotiations with the Council and hope to reach a successful conclusion still this year. It’s time for Europe to deliver.”

Note to the editor:

The EU is the leading source and destination of foreign direct investment. The draft law proposes to set up a new EU-level investment screening framework to ensure transparency and predictability for investors and national governments. Today, only 13 member states have national review mechanisms in place. Though they share the same goal, they differ considerably in scope and design. Following today’s vote in the international trade committee, the European Parliament will start negotiations with member states and the European Commission. The new Regulation needs the approval of the European Parliament and EU member states.